José Corporation realized $900,000 taxable income from the sales of its products in States X and Z. José's activities in both states establish nexus for income tax purposes. José's sales, payroll, and property among the states include the following.
Z utilizes a double-weighted sales factor in its three-factor apportionment formula. How much of José's taxable income is apportioned to Z?

Question

José Corporation realized $900,000 taxable income from the sales of its products in States X and Z. José's activities in both states establish nexus for income tax purposes. José's sales, payroll, and property among the states include the following. 
Z utilizes a double-weighted sales factor in its three-factor apportionment formula. How much of José's taxable income is apportioned to Z?

Quizplus · Accepted Answer

To calculate the amount of taxable income apportioned to State Z, we first need to calculate the sales factor for both states X and Z.

Sales factor for State X: 
($600,000 sales in state X ÷ $1,500,000 total sales) = 0.4

Sales factor for State Z: 
($900,000 sales in state Z × 2 ÷ $1,500,000 total sales) = 1.2

Next, we need to calculate the apportionment percentage for State Z using the three-factor apportionment formula:

Apportionment percentage for State Z = (0.4 + 0.5 + 0.1) ÷ 2 = 1

Finally, we can calculate the amount of taxable income apportioned to State Z:

$900,000 × 1 = $900,000

Therefore, the correct answer is C) $180,000.

José Corporation Realized $900,000 Taxable Income from the Sales of Its